Correlation Between First Hawaiian and BNP Paribas

Can any of the company-specific risk be diversified away by investing in both First Hawaiian and BNP Paribas at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Hawaiian and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Hawaiian and BNP Paribas SA, you can compare the effects of market volatilities on First Hawaiian and BNP Paribas and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Hawaiian with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and BNP Paribas.

Diversification Opportunities for First Hawaiian and BNP Paribas

-0.8

Correlation Coefficient

First Hawaiian  BNP Paribas

Pay attention - limited upside

The 3 months correlation between First and BNP is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA and First Hawaiian is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Hawaiian are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of First Hawaiian i.e., First Hawaiian and BNP Paribas go up and down completely randomly.

Pair Corralation between First Hawaiian and BNP Paribas

Considering the 90-day investment horizon First Hawaiian is expected to generate 0.54 times more return on investment than BNP Paribas. However, First Hawaiian is 1.84 times less risky than BNP Paribas. It trades about 0.01 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.06 per unit of risk. If you would invest  2,741  in First Hawaiian on September 12, 2024 and sell it today you would earn a total of  1.00  from holding First Hawaiian or generate 0.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

First Hawaiian  vs.  BNP Paribas SA

First Hawaiian

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical indicators, First Hawaiian sustained solid returns over the last few months and may actually be approaching a breakup point.

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with First Hawaiian and BNP Paribas

The main advantage of trading using opposite First Hawaiian and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, BNP Paribas can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BNP Paribas will offset losses from the drop in BNP Paribas' long position.

The idea behind First Hawaiian and BNP Paribas SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.